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Agenda & Minutes

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Mayor & Council (View All)

City Council Study Session Agenda & Minutes

Thursday, July 27, 2017

July 27, 2017
12 Noon
City Hall, Medford Room
411 West 8th Street, Medford, OR

1.     Self-Insurance

July 27, 2017
12 Noon
City Hall, Medford Room
411 West 8th Street, Medford, OR

The Medford City Council Study Session was called to order at 12 noon in the Medford Room of City Hall on the above date with the following members and staff present:
Councilmembers Clay Bearnson, Dick Gordon, Tim Jackle, Kim Wallan and Michael Zarosinski
City Manager Brian Sjothun; Deputy City Manager Kelly Madding; City Attorney Lori Cooper; Deputy City Recorder Winnie Shepard; Human Resources Director Mike Snyder; Finance Director Alison Chan; USI Insurance Services, Inc.’s Senior Vice President Doug Deangelis; Jackson County Human Resources Director Cleve Brooks
Mayor Wheeler and Councilmembers Kay Brooks, Tim D’Alessandro, Kevin Stine were absent.
USI Insurance Services, Inc.’s Senior Vice President Doug Deangelis provided a brief history of his experience and his work with the City.
Partial Self-Insurance Structure:
  • Can pick and choose choice options
  • Overall “morbidity” of the group; age, health, and illnesses impacts the expense
  • Insurance companies offer options with:
    • Third Party Administrator (TPA)
    • Administrative Services Only (ASO) offer self-insurance “platform” only
  • Although expenses vary monthly depending on claims, payments are unified based on overall expenses
  • Insurance carrier how do you access networks and providers
    • Should be exactly as today, but the price is explicit
    • Use the care providers and networks as the insurance carrier
    • Administration cost is known and can be less for partially self-insured
    • ASO integrated network, case management, pharmacy management, cost more but they regulate/manage the above; required to use their network
      • Some TPA’s have access to multiple networks
  • Fees usually decrease due to transparency, but based on industry and actuarial tables
  • More companies/agencies moving to self-insurance
  • Likelihood of success occurs over a five-year period; partially self-insured is a commitment
  • Could get refund of any overages, but the policy is more expensive
  • The first couple years it would be ultra conservative, to ensure coverage
  • Currently, City is set at $125,000 stop loss, plus an administrative cost
  • The City averages approximately three members per one employee covered
  • Either earn profits or eliminated costs; the amount of fees paid consist of taxes and claims
  • Currently approximately $200,000-$300,000 estimated savings
  • Insurance companies consider the prior two years of claims
    • To determine coverage, 25% of the previous year plus the entire current year
    • Includes all fixed expenses
  • The City is running about 8% under expenses for this year, but our prior year is causing increased expenses
  • Current numbers result in 13.38% increase based on our actual numbers; probably would be around a 6% increase
Jackson County Human Resources Director Cleve Brooks Cleve stated the County has been self‑insured for eight or nine years. The claims expense has varied, but employee premiums have remained the same during that time period.
  • Police and Fire have large percentage of men, which spend less in stop loss terms
  • Aggregated data mining and chronic disease determination to determine future expenses
  • Claims over 12 months should have 20% margin; but generally 5% to 10% over
  • Most important factor of cost savings is the commitment; minimum of 36 to 60 months
Human Resources Director Mike Snyder noted Jackson County would like City to join the site clinic.  The clinic would be a benefit for management employees and offers free visits and in-house prescriptions. To join, there is a depreciated expense of the build out and a monthly cost per employee is approximately $23, which goes to the clinic.
*Councilmember Gordon left at 1:13 p.m.
Mr. Snyder clarified it would most likely be January of 2019 before everything is set up. The premiums for the first three months are used to create the reserve. 
Finance Director Alison Chan noted that the City’s property insurance has already moved to partially self‑insured.
Council did not object to moving forward with a self-insurance option.
Mr. Deangelis advised that a mock up for self-insurance with a side-by-side comparison would be available by mid-October at the latest. 
Mr. Snyder stated all bargaining units were invited to the study session, although only one Teamsters represented attended.  The Human Resources Department will continue utilize the insurance committee throughout this process.
The meeting adjourned at 1:20 p.m.
Winnie Shepard
Deputy City Recorder

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